China to Aid Solar Industry by Easier Financing: Cabinet

Updated on

China, the world’s biggest maker of solar panels, will boost domestic demand for solar-generated electricity and provide easier financing to manufacturers as rising trade tensions slow exports.

Grid companies should build networks that will be operational in sync with solar-generation projects and give priority access to their produced power, while lenders need to help panel makers raise capital, according to a statement on the central government’s website yesterday after a State Council meeting. Authorities will also implement 10 steps to cut air pollution, including curbing dirty projects and making local governments more accountable for environmental management.

China’s solar-panel industry, which supplies more than half the world market, is unprofitable amid a global glut and slower economic growth that’s cut demand. The European Union this month imposed provisional tariffs of 11.8 percent on imports of solar panels from Chinese companies after an investigation found they were being sold in the 27-nation bloc at less than their production cost.

“We must support the solar-panel industry overcoming difficulties and pursuing healthy development,” according to the statement from the State Council Premier Li Keqiang’s Cabinet. “While solidifying competitiveness in the global market, we need to stimulate effective domestic demand for solar power and spur innovation and advancement,” it said.

Loan Defaults

The government will encourage mergers and acquisitions among solar companies and curb blind expansion, the State Council said.

LDK Solar Co., the world’s second-biggest wafer maker, said in April that it was seeking a new loan facility of about 2 billion yuan ($326 million) from local banks. With debt of $2.9 billion and eight straight quarterly losses, it failed to fully repay $23.8 million in bonds due April 15. The biggest unit of Suntech Power Holdings Co. went into bankruptcy in March after it defaulted on $541 million of bonds.

Suntech’s default sparked concern that other Chinese solar companies may have trouble repaying debt and will make financing “more difficult” for other producers, Xie Jian, chief operating officer of JA Solar Holdings Co. China’s largest solar-cell maker, said in an interview on March 21.

The EU anti-dumping levy on Chinese solar panels is scheduled to rise to 47.6 percent for about 130 producers and as high as 67.9 percent in August, should Chinese and EU officials fail to resolve the dispute.

’Tough Measures’

Li said yesterday trade protectionism is a “blind alley” and called for cooperation and free trade to help bolster a global economic recovery, the official Xinhua News Agency said, citing comments he made at a meeting with Klaus Schwab, chairman of the World Economic Forum.

In its statement yesterday, the State Council said it would take “tough measures for tough tasks” as it steps up efforts to curb air pollution. These include increasing levies on the discharge of pollutants, controlling high energy-consuming and polluting industries and improving control of airborne particles measuring less than 2.5 microns in diameter, known as PM2.5, that can pose health risks.

The government will build systems that evaluate local authorities’ performance on improving air quality and work to reduce excess capacity in industries such as steel, cement, electrolytic aluminum and plate glass, according to the statement.